I’m focusing this letter on a few key readings and news items from last few days.
Enjoy.
Us vs. Them
Trump signed 4 key executive orders on Saturday. You can read the memo here. These measures taken by the President are unusual and some would say, fairly controversial, given that Congress hasn’t signed off yet. One would imagine that all of these issues are bipartisan…
Rest assured, these executive orders will likely drive the markets up this week.
Unemployment. Each unemployed American qualifies for $400/week that would supplement the state benefits. Democrats want to continue at the $600/wk level. Republicans proposed $200/wk. They are stuck in a tug of war, so Trump wants to meet in the middle at $400/wk. Details include states contributing 25% (or $100/wk). This won’t make states happy since they’re already in a financially dire situation.
Payroll tax deferral. Delaying payroll tax collections for a later date for people making less than $104K/yr. Payroll taxes help pay for Social Security and Medicare benefits. Trump is aiming to defer employee’s contribution until the end of year. His press conference hinted at cancelling these taxes altogether if he were to be re-elected in Nov. This is a bit blurry since Congress has to approve tax-related cuts. And they have yet to agree.
Evictions. 110M people are renters in the US. Trump wants to ban evictions amidst COVID. At least that’s what he shared at the press conference. The details are starting to reveal that he’s asking Alex Azar, Sec of Health & Human Services and Robert Redfield, CDC Director, to look more into whether an eviction ban is needed.
Student loan payments deferred until Dec 31, 2020. Trump is waiving all interests on student loans until beginning of next year.
As you can imagine, these orders have garnered plenty of interest from both sides of the aisle. To give you a flavor of Twitter wars…
Us vs. them show continues as we approach election season.
Bank of England reflects on slow recovery
BofE shares its perspective on the road ahead. Link to the post. A few key things to note:
Rates will remain at 0.1% for the foreseeable future
UK GDP is expected to have been over 20% lower in 2020 Q2 than in 2019 Q4
Twelve-month CPI inflation increased to 0.6% in June from 0.5% in May. There’s strong conviction of inflation dropping to 0.25%. All signs are pointing to UK’s inflation remaining well below 2% for until the end of 2021.
Personal notes:
There’s a chance that BofE triggers a negative rate. Historically, this has been taboo, but it’s now a serious option.
Recovery in the UK continues to be sluggish just like it is in other key markets (including US). Consumer confidence likely won’t return to normal until beginning of 2021. Housing market has recovered nicely and in many places to pre-COVID levels.
Maintaining current rate of 0.1% was unanimous amongst the 9 members of monetary policy council (MPC). It’ll be interesting to see how the situation evolves as we head into the final rounds of Brexit transition out of EU (deadline: Dec 31, 2020).
Shopify GMV overtaking eBay
Shopify’s success is no surprise. Beating out eBay in gross merchandise value (GMV) and touching $30B is a strong signal of exciting times ahead for the company. Link
Fair competition. A note from TikTok’s new CEO.
In his note, it’s easy to spot Kevin Mayer, TikTok’s new CEO, vividly calling out American social media companies for opening up their moderation policies, algorithmic principles amongst other things. Link to post.
In the latest developments of TikTok, it’s becoming more clear that an M&A is on the horizon. Twitter has now joined the batch of companies that are in talks with the company. Speaking of competition, Twitter should bring back Vine.
Aaron Levie, Box’s CEO, nicely points out what we’re all thinking…